Lott Corporation in Macon,Georgia converts to S corporation status in 2008.Lott used the LIFO inventory method in 2007 and had a LIFO inventory of $420,000 (FIFO value of $550,000).How much tax must be added to the 2007 corporate tax liability,assuming that Lott is subject to a 35% tax rate.

Question

Quizplus · Accepted Answer

$11,375.$550,000 (FIFO basis)- $420,000 (LIFO basis)= $130,000 F1F1F1S1F1F1F10 35% = $45,500/4 = $11,375.The remaining three installments of $11,375 each are paid with Lott's next three tax returns.

Lott Corporation in Macon,Georgia Converts to S Corporation Status in 2008.Lott